Common law[edit]

Under common law legal systems, the basic form of partnership is a general partnership, in which all
partners manage the business and are personally liable for its debts. Two other forms which have
developed in most countries are the limited partnership (LP), in which certain limited partners
relinquish their ability to manage the business in exchange for limited liability for the partnership's
debts, and the limited liability partnership (LLP), in which all partners have some degree of limited
liability.
There are two types of partners. General partners have an obligation of strict liability to third parties
injured by the Partnership. General partners may have joint liability or joint and several
liability depending upon circumstances. The liability of limited partners is limited to their investment
in the partnership.
A silent partner is one who still shares in the profits and losses of the business, but who is not
involved in its management, and/or whose association with the business is not publicly known; these
partners usually provide capital in the expectation of a return on their investment.

Australia[edit]
Main article: Partnership (Australia)
Summarising s. 5 of the Partnership Act 1958 (Vic) (hereinafter the "Act"), for a partnership in
Australia to exist, four main criteria must be satisfied. They are:

Valid Agreement between the parties;

To carry on a business this is defined in s. 3 as "any trade, occupation or profession";

In Common meaning there must be some mutuality of rights, interests and obligations;

View to Profit thus charitable organizations cannot be partnerships (charities are typically
incorporated associations under Associations Incorporations Act 1981 (Vic))

Partners share profits and losses. A partnership is basically a settlement between two or more
groups or firms in which profit and loss are equally divided

Canada[edit]
Statutory regulation of partnerships in Canada fall under provincial jurisdiction. A partnership is not a
separate legal entity and partnership income is taxed at the rate of the partner receiving the income.
It can be deemed to exist regardless of the intention of the partners. Common elements considered
by courts in determining the existence of a partnership are that two or more legal persons:

Are carrying on a business

In common

With a view to profit.[4]

Hong Kong[edit]

Main article: Partnership (Hong Kong)

A partnership in Hong Kong is a business entity formed by the Hong Kong Partnerships Ordinance,
[5]
which defines a partnership as "the relation between persons carrying on a business in common
with a view of profit" and is not a joint stock company or an incorporated company.[6] If the business
entity registers with the Registrar of Companies it takes the form of a limited partnership defined in
the Limited Partnerships Ordinance.[7][8] However, if this business entity fails to register with the
Registrar of Companies, then it becomes a general partnership as a default. [8]

India[edit]
According to section 4 of the Partnership Act of 1932, which applies in both India, "Partnership is
defined as the relation between two or more persons who have agreed to share the profits of a
business run by all or any one of them acting for all". This definition superseded the previous
definition given in section 239 of Indian Contract Act 1872 as Partnership is the relation which
subsists between persons who have agreed to combine their property, labor, skill in some business,
and to share the profits thereof between them. The 1932 definition added the concept of mutual
agency. The Indian Partnerships have the following common characteristics:
1) A partnership firm is not a legal entity apart from the partners constituting it. It has limited
identity for the purpose of tax law as per section 4 of the Partnership Act of 1932. [9]
2) Partnership is a concurrent subject. Contracts of partnerships are included in the Entry no.7 of
List III of The Constitution of India (the list constitutes the subjects on which both the State
government and Central (National) Government can legislate i.e. pass laws on). [10]
3) Unlimited Liability. The major disadvantage of partnership is the unlimited liability of partners for
the debts and liabilities of the firm. Any partner can bind the firm and the firm is liable for all liabilities
incurred by any firm on behalf of the firm. If property of partnership firm is insufficient to meet
liabilities, personal property of any partner can be attached to pay the debts of the firm. [10]
4) Partners are Mutual Agents.The business of firm can be carried on by all or any of them for all.
Any partner has authority to bind the firm. Act of any one partner is binding on all the partners. Thus,
each partner is agent of all the remaining partners. Hence, partners are mutual agents. Section 18
of the Partnership Act, 1932 says "Subject to the provisions of this Act, a partner is the agent of the
firm for the purpose of the business of the firm"[10][11]
5) Oral or Written Agreements. The Partnership Act, 1932 nowhere mentions that the Partnership
Agreement is to be in written or oral format. Thus the general rule of the Contract Act applies that the
contract can be in be 'oral' or 'written' as long as it satisfies the basic conditions of being a contract
i.e. the agreement between partners is legally enforceable. A written agreement is advisable to
establish existence of partnership and to prove rights and liabilities of each partner, as it is difficult to
prove an oral agreement.[10][12]
6) Number of Partners is minimum 2 and maximum 50 in any kind of business activities.Since
partnership is agreement there must be minimum two partners. The Partnership Act does not put
any restrictions on maximum number of partners. However, section 464 of Companies Act 2013, and
Rule 10 of Companies (Miscellaneous) Rules, 2014 prohibits partnership consisting of more than 50
for any businesses, unless it is registered as a company under Companies Act, 2013 or formed in
pursuance of some other law. Some other law means companies and corporations formed via some
other law passed by Parliament of India.

7) Mutual agency is the real test. The real test of partnership firm is mutual agency set by the
Courts of India, i.e. whether a partner can bind the firm by his act, i.e. whether he can act as agent of
all other partners.[10]